If you're just now offering health insurance to your workers or you're considering being involved in the process, you may wonder about the best way of going about it. With so many rules and regulations, you may be unclear about what you can and can't do.
A classic example is reimbursement: Can you as an employer reimburse your employees for the cost of personal health insurance (PHI) premiums?
The short answer: Yes, you can. But should you? After reading the following, you may discover why it's preferable to go with a corporate health insurance plan instead:
There is a hefty tax penalty called the Fringe Benefit Tax (FBT). Paid by employers, the FBT requires companies to pay a certain tax on most of the benefits they provide to their workers. However, it can also apply if you have an arrangement in place with your employees where they find their own coverage.
In other words, there are no tax breaks by going about this rather circuitous method of assisting your employees with their PHI protection. In fact, the liability aspect of this method makes it the most expensive strategy of them all.
It's far more straightforward and it can be tax efficient to establish a corporate health insurance plan as there is greater visibility into what benefits are available, paired with a range of advantages that may not be available by letting your workers go it alone.
More room for error
If there is one thing that just about everyone can agree on it's that insurance laws and plans can be very complex, especially for someone who has no familiarity with health insurance or who has never purchased PHI before. By going it alone, employees can end up with policies that simply do not meet their needs. The expert advice that can come with a corporate health insurance plan can be invaluable.
Most corporate health insurance policies can now include include the flexibility of cover to meet the needs of workers and their family members so there is less hassle and runaround. In the past, corporate plans have tended to be rigid in the benefits provided but using the expertise of a corporate health insurance consultant can open up a range of possibilities.
Even if you have a small business of fewer than 20 employees, every business owner seeks to grow. But a year or two from now, should you have more people on your payroll, think about how complicated it would be to reimburse every single employee for their own policy. The administrative aspect of it would be extremely time-consuming and inefficient.
It's far better to go with a corporate plan that is seamless and far less labor-intensive.
Eliminates incentive to join your company
These days, job seekers are looking for more than a simple paycheck. They also want additional perks, like personal health insurance. When it comes to what employees desire in a prospective employer, health insurance is among their most desired extras, simply because many employers haven't invested in it.
The ability to offer applicants employer supported coverage for their medical treatments and medications may be the difference between a highly qualified candidate choosing you over another employer. By just reimbursing your employees the cost of health insurance premiums, you're leaving the legwork – meaning the actual obtaining of coverage – all up to them.
Harder to negotiate premiums
Among the greatest advantages of a corporate health insurance plan is the fact that carriers don't always have hard-and-fast rules regarding costs; there is almost always room for negotiation when you have dozens or hundreds of employees looking for health insurance.
While it's almost impossible that individual employees may be able to get a more affordable policy without compromising coverage and benefits, the chances of success are less likely, simply because they don't have the leverage that groups typically do. In other words, the insurer could potentially be more willing to offer incentives to a group than an individual.
Group discounts are a hallmark of corporate health insurance plans.
Customisation may be more difficult
Health insurance isn't what it used to be; corporate plans can be packaged and tailored based upon your needs and those of your employees. In short, they can be customised and measurable in terms of a range of outcomes or objectives.
While individual personal health insurance plans can be right-sized, it's inefficient from a corporate perspective and the well-being evaluation processes may not be achievable.
Greater risk for absenteeism
Nothing is more important to your company's ongoing success than your workers' ongoing well-being. Wellness programs help in this regard by reducing absenteeism. However, you may have less incentive to create a wellness program if your workers have their own individual plans, which have their own rules regarding wellness and how it affects their costs. They may ultimately do nothing, failing to take the proactive steps that can keep them healthier longer through proper diet and exercise.
If you're looking to save and strengthen your business, corporate health insurance is the way to go. Please contact us at HICA for a comprehensive health coverage plan that works for everyone.